Detailed answer

1. Who legally receives the membership interest after probate?

When a person who owned a membership interest in an LLC dies, title to that interest passes under the decedent’s will or by Mississippi intestacy law through probate. The personal representative (executor or administrator) handles the estate’s assets during probate and then distributes property to the beneficiaries under the court’s order or the will.

Get a certified copy of the letters testamentary or letters of administration and the probate court’s order or the will that describes the distribution. These documents are usually required to show the new owner’s authority to receive and transfer the decedent’s business interests.

2. What part of the LLC interest is inherited?

Membership interests typically split into two categories: (a) economic rights (the right to distributions and allocations of profits and losses) and (b) governance rights (the right to vote, manage, or be a member). Under common LLC law rules, the economic portion is freely transferable as personal property unless the operating agreement says otherwise. Governance or membership rights often require other members’ consent to transfer or to admit the transferee as a member.

In a single‑member LLC, there are no other members to withhold consent. That generally makes it easier for an heir to become the new sole member, but the LLC’s governing documents still control.

3. Check the operating agreement and formation documents first

Review the LLC’s operating agreement and articles of organization. Typical provisions you should look for:

• Buy‑sell or transfer restrictions (right of first refusal, buyout formulas, or deadlines).
• Rules about admitting a transferee as a new member after a member’s death.
• Any special steps required to effect a transfer (written assignment, member vote, amended operating agreement).

If the operating agreement is silent or ambiguous, default rules in Mississippi law and standard LLC practice will apply. The Mississippi Secretary of State’s business services pages and the state’s LLC statutes provide background on formation and regulation of LLCs; you can review general information from the Mississippi Secretary of State at https://www.sos.ms.gov and the Mississippi Legislature at https://www.legislature.ms.gov.

4. Practical steps to transfer the inherited membership interest

Follow these typical steps to complete the transfer after probate:

1. Obtain probate documentation: certified letters and the order distributing the LLC interest.
2. Read the LLC operating agreement and the articles of organization to identify any required procedures or limitations.
3. If the operating agreement requires member approval to admit a transferee, obtain any required written consents. In a true single‑member LLC, the transferee usually becomes the new member because no other members exist to refuse admission, but a written record is still important.
4. Prepare an assignment of membership interest or an executory transfer document showing the estate’s transfer of the decedent’s interest to the beneficiary. Have it signed and notarized as needed.
5. Amend the LLC’s records and operating agreement to show the new member and any new capital accounts, percentage interests, or manager appointments.
6. Update business records and bank accounts. Banks and third parties will usually ask for the probate documentation and updated LLC records before changing account signers.
7. Notify the Mississippi Secretary of State only if the articles of organization or state filing list members or managers and require updating. Many states do not require updating member names publicly, but you should check the LLC’s formation documents and the Secretary of State’s business filing requirements at https://www.sos.ms.gov/BusinessServices.
8. Address tax and federal ID issues (see next section).

5. Tax and federal ID (EIN) considerations

Transferring ownership may have tax consequences for the estate and for the new owner. Important points:

• If the LLC remains a single‑member LLC owned by an individual, it is typically treated as a disregarded entity for federal income tax, and the new owner reports business activity on his/her individual return.
• If the membership transfer changes the number of members (for example, transferring part of the interest to multiple heirs), the LLC’s federal tax classification could change (from single‑member disregarded entity to partnership). That change may require getting a new EIN or filing different tax returns. See IRS guidance on whether you need a new EIN at https://www.irs.gov/businesses/small-businesses-self-employed/do-you-need-a-new-ein and consult a CPA or tax attorney.
• The estate may also need to report the fair market value of the membership interest on an estate tax return if the estate is large enough to trigger filing requirements.

6. What if the operating agreement bars transfer or other members object?

If the operating agreement contains a restriction (for example, a buy‑sell or right of first refusal) the estate or the heir must follow that procedure. If other members (if any) refuse to admit the heir as a member, the heir may still receive the economic interest (distributions) but is not admitted as a voting member unless the agreement or members consent requires admission.

If there is a dispute about the validity of the transfer, whether the heir becomes a member, or over interpretation of the operating agreement, speak with a Mississippi attorney experienced in both probate and business/LLC law.

7. When to update public filings and business registrations

Most of the time, an internal change in membership does not require amending the articles of organization. However, you should update any filings that identify the manager, registered agent, or other public contact when those change. Check the Mississippi Secretary of State’s business services site for filing requirements and forms at https://www.sos.ms.gov/BusinessServices.

8. If the LLC is closely held or the decedent ran the business actively

When the decedent actively managed the business as the sole member, transition planning is especially important. Beneficiaries who lack experience may prefer selling the interest to the business or conducting a buyout rather than managing the company. Consider getting a business valuation and professional advice on valuation, tax, and management transition.

9. Probate court’s role and when a court order helps

Sometimes a clear court order distributing the specific LLC interest or authorizing the personal representative to transfer it makes the transfer straightforward. Where the operating agreement’s procedures are unclear or there is disagreement among heirs or with other members, a probate court order that directs or approves the transfer can be very helpful to present to the LLC and third parties.

10. Quick checklist

• Collect certified probate documents (letters and distribution order).
• Read the operating agreement and articles of organization.
• Prepare and sign an assignment of membership interest as required.
• Get member consents if the operating agreement requires them.
• Update LLC internal records and any public filings that list managers/agents.
• Update bank, vendor, and licensing records.
• Address federal tax and EIN implications with a tax professional.

Helpful hints

• Start with the operating agreement. It controls unless it conflicts with Mississippi law.
• Get certified copies of probate documents — banks and the LLC will usually require them.
• If the LLC had only one member and the heir will be the sole owner, admission is usually straightforward — but document everything in writing.
• If multiple heirs inherit the interest together, decide whether to hold the interest as co‑owners or distribute proceeds; a co‑ownership often causes management and tax complications.
• Keep corporate records current: minutes, amended operating agreement, and an executed assignment help avoid later disputes.
• Talk to a CPA about the tax basis step‑up that may apply at death — that can affect the new owner’s tax consequences when they later sell the interest.
• Consider mediation if heirs and LLC managers disagree — it’s faster and less costly than litigation.
• Use the Mississippi Secretary of State for filing instructions and required forms when changing public information: https://www.sos.ms.gov/BusinessServices.
• For probate court procedures or forms, contact the probate clerk in the county where the decedent lived or see the Mississippi Judiciary website at https://www.courts.ms.gov for general guidance.